Crypto-to-Crypto Tax in NZ: Why Every Swap Counts

The short version

• In NZ, swapping one cryptoasset for another is a taxable disposal — BTC to ETH, ETH to a stablecoin, anything to anything.
• You're taxed on the gain on the coin you swapped out of, measured in NZD, even though no dollars hit your bank.
• Each swap resets the cost base: the value you swapped at becomes the cost of the new coin for next time.
• Stablecoins count. Swapping into USDT or USDC is still a disposal.
• Across a year of active swapping, this becomes a chain of taxable events — which is why clean, NZD-based records matter so much.

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This is the single most-missed rule in NZ crypto tax, so it's worth its own explainer. If you've read do I pay income tax on crypto gains, you know disposals are taxable — this post is about the mechanics of the one that surprises people most: trading one coin for another.

Why a swap is a taxable event

IRD treats crypto as property. When you swap BTC for ETH, you're doing two things at once: disposing of your BTC and acquiring ETH. The disposal is what triggers tax — you've realised whatever gain the BTC made since you bought it, and NZ taxes that gain as income. The fact that you received another coin instead of cash doesn't change it; you still "sold" the BTC at its market value that day.

There's no capital gains tax in NZ, but that doesn't help here — crypto gains are income, and a swap realises them just like a sale to NZD would.

How the cost base carries across the chain

The bit that makes swaps confusing is the cost base — what a coin "cost" you for working out the next gain. Each swap resets it. Follow a simple chain:

Walking it through:

1. You buy BTC for $5,000. That's your cost base.
2. BTC rises to $8,000 and you swap it all for ETH. You've disposed of the BTC → $3,000 gain. Your new ETH now has a cost base of $8,000.
3. ETH slips to $7,000 and you swap it into USDT (a stablecoin — still a disposal). That's a $1,000 loss, and your USDT cost base is $7,000.

Net for the year: $2,000 of taxable income — despite never withdrawing a dollar to your bank.

Yes, stablecoins count

A common assumption is that moving into a stablecoin like USDT or USDC is "parking in cash," so it doesn't count. It does. A stablecoin is still a cryptoasset, so swapping into it is a disposal of whatever you swapped out of — you realise the gain or loss at that point. Swapping out of the stablecoin later is another disposal (usually near-zero gain if the peg held, but still an event).

When you have lots of lots: FIFO or weighted average

If you bought the same coin at different times and prices, you need a rule for which units you disposed of. IRD accepts first-in-first-out (FIFO) or weighted average cost — pick one method and apply it consistently. On an active account with hundreds of buys and swaps, this is the part that's essentially impossible to do accurately by hand, and where software earns its keep.

The record-keeping reality

Every leg needs the NZD value at the moment of the swap. Your exchange shows it in USD or in the other coin; IRD wants NZD. Multiply that across a year of swaps on two or three platforms and you can see why people dread it. The answer is the same as for the rest of crypto tax: capture it as you go, in NZD, so the chain is already built when you file.

Common mistakes

• Treating a swap as a non-event. BTC to ETH is a disposal — the gain is taxable now, not when you cash out.
• Ignoring stablecoin swaps. Moving into USDT/USDC is a disposal too.
• Losing the cost base. Each swap resets it; if you don't track it, every later gain is guesswork.
• Mixing methods. Choose FIFO or weighted average and stick to it.
• Using USD figures. Convert each leg to NZD at the time of the swap.

What to do next

If you swap between coins, treat each swap as a disposal and track the NZD value and cost base at every leg. TradeLog NZ keeps that chain in order and converts each leg to NZD, so the gains and losses are worked out for your IR3 — and you can estimate the tax with the free NZ trading tax calculator.

Worth reading next: do I pay income tax on crypto gains in NZ for the big picture and DeFi & staking tax if you also earn rewards.

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Is swapping one cryptocurrency for another taxable in New Zealand?

Yes. Swapping one cryptoasset for another is a taxable disposal in NZ. You're treated as selling the coin you swapped out of at its market value on the day, so any gain since you acquired it is taxable income — even though you didn't receive any cash. The coin you swapped into takes a new cost base equal to that value.

Do I pay tax swapping crypto to a stablecoin like USDT?

Yes. A stablecoin is still a cryptoasset, so swapping into USDT or USDC is a disposal of whatever you swapped out of, and any gain is taxable at that point. Swapping back out of the stablecoin later is another disposal, though the gain is usually small if the peg held.

How do I calculate the gain on a crypto-to-crypto swap?

Take the NZD market value of what you disposed of at the time of the swap, and subtract its cost base (what it cost you in NZD, including via a previous swap). The difference is your taxable gain or loss. The swap value then becomes the cost base of the coin you received, for working out the next disposal.

What cost-basis method does NZ use for crypto?

IRD accepts first-in-first-out (FIFO) or weighted average cost. You choose one and apply it consistently to decide which units you disposed of when you've bought the same coin at different prices. On an active account with many buys and swaps, tracking this accurately by hand is very difficult, which is why most active traders use software.

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This article is general information only and does not constitute formal tax advice. Crypto tax depends on your circumstances and the rules can change. Review with a qualified NZ tax accountant before filing. TradeLog NZ accepts no liability for errors in your tax return. For the official rules, see IRD on cryptoassets.